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From Home Furnishing Business

Furniture Orders up 9% in August

New orders for furniture from retailers rose 9 percent in August compared with the same month last year, according to the most recent Furniture Insights survey.

That performance was up against good results in August 2012, when new orders rose 8 percent compared with August 2011.

High Point accounting firm Smith Leonard conducts the monthly survey of residential furniture manufacturers and distributors.

Year-to-date, new orders are 6 percent ahead of the first eight months of 2012, when orders were 5 percent above the same point in 2011.

August shipments rose just 3 percent compared with August 2012, when shipments were up 6 percent over 2011. Year-to-date, shipments are 4 percent ahead of the first eight months of 2012.

Backlogs rose 17 percent over August 2012 as orders continue to outpace shipments. Backlogs were 13 percent higher in July compared to July 2012.

Receivable levels fell 3 percent from August 2012 but were 3 percent higher than July.

"We suspect the 3 percent decline from last year was a timing issue," said Smith Leonard Managing Partner Ken Smith in the survey report.

August inventories were flat compared with last year's levels and were up 1 percent from July 2013.

"Inventories continue to appear to be in good shape considering volume levels," Smith said.

Factory and warehouse employees rose 2 percent in August compared with the same month in 2012, higher than last year, about the same as reported last month.

Factory and warehouse payrolls increased 13 percent over August 2012; and were 12 percent higher than July.

"The increase over July is somewhat normal with the shutdown week in July, but the increase over last year seems a bit much," Smith said. "We are thinking this is also a timing issue."

Year-to-date, factory and warehouse payrolls were up 7 percent for the eight months, up from a 6 percent increase reported last month.

"From all we heard at Market, as well as previous to Market, business at retail was pretty good up through Labor Day, then when Washington shut the bulk of government down, business really seemed to soften," Smith said in summary. "Some reports at Market indicated that business had picked back up the week or so prior to Market.

While Smith noted an upbeat mood at October High Point Furniture Market, consumer confidence was lagging.

"Most of this blame was at the feet of federal government shutdown," Smith said. "Similar to previous fiscal cliff and government shutdowns, consumer expectations declined. It seems that every time the economy and especially the furniture industry seems to gain some momentum, something like this happens.

"We hope that consumers are getting a bit used to some of this, but the confidence survey's do not seem to indicate that."

He noted a slowing of existing home sales in September but that they were still well ahead of last year.

"It seems that low inventories are hurting existing home sales as well as starting to drive up pricing," Smith said. "Mortgage rates, while rising, are still at historically low rates, so we hope that they will stay at reasonable levels. Retail sales in September were down slightly but up at furniture and home furnishings stores according to the U.S. Census Bureau so that seemed to confirm what we were hearing."

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